Last October, at ARM TechCon’s developer conference, ARM’s chairman, Masayoshi Son, outlined his vision of a trillion IoT devices being built over the next two decades. This, he predicted, will lead to an information revolution that will redefine all industries.

The timescale of Mr Son’s projection resonates because we are currently two decades into the first information revolution. In the mid-90s, few work computers had e-mail clients or web browsers. By 2000 those technologies were commonplace, and today they are so entrenched in our working lives that it’s hard to imagine how companies ever functioned without them.

Back in 2000, Alan Greenspan, then Chairman of the Federal Reserve, gave a speech about technology and its impact on the economy. In the 1990s the US enjoyed the longest period of uninterrupted growth in its history, and unlike previous booms, inflation stayed well under control.

Greenspan attributed this goldilocks period (not too hot, not too cold) to the dawn of the internet. Previously companies had to work in ‘a fog of uncertainty’, he said. Executives didn’t know how much inventory sat in their warehouses, how many orders their sales teams had secured during the previous week, or whether customers were pleased with the latest product release. Important business decisions were taken using information that was incomplete and out-of-date.

The adoption of internet technologies cleared much of this fog. It vastly improved our ability to communicate with colleagues and customers, and it made information readily accessible, on a global scale. Greenspan quantified the contribution of technology to the economy by noting that corporate productivity growth accelerated in the 1990s, running at 2x its long-term trend from 1995 to 2000. This added about 3% to US GDP over that period.

“When historians look back at the latter half of the 1990s a decade or two hence, I suspect that they will conclude we are now living through a pivotal period in American economic history,” he said.

“New technologies that evolved from the cumulative innovations of the past half-century have now begun to bring about dramatic changes in the way goods and services are produced and in the way they are distributed to final users.

“Those innovations, exemplified most recently by the multiplying uses of the Internet, have brought on a flood of start-up firms, many of which claim to offer the chance to revolutionize and dominate large shares of the nation’s production and distribution system.”

Greenspan’s speech was more prophetic than he could have imagined. At the time he wrote it in 2000 he was concerned about a stock market bubble, and the valuations of those internet start-up firms. In the decade or two after this speech was written, a few of those start-ups achieved delivered on their promise to revolutionize America’s economy, and now they are among the most valuable companies on the planet.

When historians look back on the late 2010s in a decade or two from now, will they conclude that we are now living through a pivotal period for technology and the economy? ARM believes the answer is yes. Up to now, the information revolution has mainly impacted person-to-person communications, and the way we access data that was stored on remote computers. In the next two decades, we will see a revolution in the type of data we collect. The Internet of Things gives us the ability to capture information about anything, anywhere, in real time, and the cost of this technology is falling rapidly.

In two decades’ time, technologies that are nascent today will eventually be so commonplace that we will hardly notice them. Consumers will consider it normal that the cost of car insurance depends on how well they drive, their car alerts the local mechanic when a part is about to fail, and street lights turn off when the road is empty.

The Internet of Things has the potential to boost the economy by transforming business models, increasing output, cutting waste and eliminating accidents. The productivity gains stemming from IoT will help us feed and house the global population as it marches relentlessly towards ten billion people.

In our white paper, ‘The route to a trillion devices’, we take a closer look at the economics of IoT. On a macroeconomic scale, we believe that the deployment of IoT systems will yield productivity gains as meaningful as those seen in the US in the late 1990s. This has the potential to add trillions of dollars to output worldwide.

On a microeconomic scale, deployment of IoT systems will be influenced by the information profit margin. The value of information is rising thanks to advances in data science and machine learning; at the same time, the cost of collecting information is on a downward trend thanks to innovations in semiconductor technology, cloud computing, and mobile connectivity. This beneficial divergence between value and cost is driving exponential growth in profitable opportunities for IoT.

By 2035, the technology companies that sell IoT hardware and services could be serving a market worth a trillion dollars per annum. That is an exciting figure, but an even greater value will flow to the companies that utilize the information collected by those systems, and to the consumers who will benefit from efficiency gains across the economy.